Oil prices extended a rebound Wednesday from their biggest falls in almost 30 years, as planned US stimulus to combat the coronavirus epidemic offset worries about a price war between world’s two biggest oil-producing countries.
The two main contracts, West Texas Intermediate and Brent crude, both put on about four percent in Asian trade before slipping back slightly.
WTI was trading at about $35 a barrel and Brent at almost $39 a barrel.
Oil had plunged by almost a third Monday, the biggest drop since the 1991 Gulf War, after Saudi Arabia heavily slashed prices following a bust-up with Russia over whether to cut output.
But prices rebounded by almost 10 percent Tuesday. And on Wednesday prices pushed even higher, as investors took heart from measures outlined by US President Donald Trump to combat the economic fallout from the virus outbreak.
The plans include providing assistance to airlines and cruise companies, two especially hard-hit industries.
“Oil investors are taking comfort, and prices are finding support, from the White House administration plans for economic stimulus,” said Stephen Innes, chief market strategist at AxiCorp.
He said signs the epidemic was slowing in China — the epicentre of the outbreak — and hard-hit South Korea had also provided some relief to investors.
Despite the rebound, investors remain on edge after energy titan Saudi Aramco indicated Tuesday it would flood the market with crude — and Russia’s energy minister hit back, saying it could also ramp up production.
This week’s rout was triggered by Riyadh driving through the biggest price cuts in two decades at the weekend, following Moscow’s refusal to agree to reduce production.
Saudi Arabia and others from oil-exporting cartel OPEC led a push last week to reduce output further to shore up prices amid slumping demand due to the new coronavirus.
But Moscow, the world’s second-biggest oil producer, blocked the move — signalling an alliance with OPEC that was aimed at supporting the market was unravelling.
